According to Nadav Enbar, research analyst and co-author of the report, "Pronounced natural gas price volatility and other compliance risks encourage utility acquisition of fixed-price resources, particularly renewables, on a purely economic basis. However, most utilities do not currently account for the hedge value of renewables and thus do not recognize the resource's full value."

The report further asserts that conventional strategic planning methods undervalue RE. In addition, an overriding perception held by utilities of RE's operational shortcomings (e.g., intermittency, reliability, systems integration) and regulatory uncertainty are hampering broader adoption of RE as a risk hedge proposition. To address these barriers, the report profiles three utilities (two investor-owned utilities and one municipal) that are successfully justifying the acquisition of renewable energy through various hedging approaches.

Adds Enbar, "With increasingly complex modeling and evaluation techniques now available, utilities are steadily integrating a rising level of risk assessment into their strategic planning efforts. Historical natural gas price fluctuations, coupled with future environmental compliance costs, will encourage a fundamental rethinking of the value of renewable energy and its role within utility portfolios."